No More Reverses on VAT Reverse Charge
Despite being delayed on two occasions, HMRC’s Domestic Reverse Charge for Building and Construction Services (VAT Reverse Charge) starts in the Spring of 2021.
This means that the construction sector has another change to grapple with, against the already uniquely challenging Covid-19 backdrop.
The VAT Reverse Charge is to help combat organised crime groups operating within the construction industry. We all know what these criminals do - charge VAT and never account to HMRC for it. However, moving the obligation to pay VAT to HMRC up the supply chain impacts on the cashflow of contractors and subcontractors.
Who is affected by these changes,and when?
Contractors and subcontractors who are registered for the purposes of the Construction Industry Scheme (CIS) and receive building and construction services from others will be required to pay those others net of VAT and account for the VAT to HMRC.